The retirement of Defense Secretary Robert Gates on Thursday marks the end of an unprecedented era at the Pentagon, but he leaves office with two major questions--the outcome of the Afghan war, and the future of his budget-cutting drive--yet to be answered.

Gates assumed his post during the last years of the Bush administration, when a sweeping electoral defeat in the 2006 midterm elections led the White House to fire then-Defense Secretary Donald Rumsfeld. Gates leaves at the midpoint of the Obama administration, having moved seamlessly from serving a Republican president to becoming the most trusted national security adviser of a Democratic one. The bond between the two men has grown so tight that President Obama surprised the Defense chief during a formal ceremony at the Pentagon earlier Thursday by publicly presenting him with the Presidential Medal of Freedom, the nation's highest civilian honor.

Gates, visibly moved, jokingly told Obama that "we should have known several months ago that you're pretty good at this covert-ops stuff." The quip, a reference to the Special Operations raid earlier this year that killed Qaida leader Osama bin Laden, drew laughter from the crowd.

Obama, in his remarks at the retirement ceremony, lauded Gates as a "humble American patriot" with a "profound sense of duty." The president praised Gates for turning around the Iraq war and leading a crash effort to send tens of thousands of mine-resistant armored vehicles to Iraq and Afghanistan, saving untold numbers of military personnel from being killed or maimed by insurgent bombs. Obama also publicly credited Gates with helping to turn around the Iraq war, which had seemed doomed to failure when the Defense chief took office.

Still, Gates leaves public life with his ultimate legacy and the fates of his last two major initiatives--escalating the Afghan war, and pushing major Pentagon budget cuts--far from clear.

Take Afghanistan. During his years in the Obama White House, Gates has consistently supported the military's request for additional troops. In 2009, the Defense chief crafted the compromise proposal that "surged" 33,000 troops into Afghanistan as part of a shift to a manpower-intensive counterinsurgency strategy modeled on the one used in Iraq. More recently, he bridged a yawning gulf between Obama's civilian advisers and the Pentagon's top military commanders by drawing up a timetable for withdrawing all of the surge troops from Afghanistan by September 2012.

The military has registered some clear gains since the reinforcements started flowing into Afghanistan last year. U.S., NATO, and Afghan forces have pushed the Taliban out of many of its traditional strongholds in southern Afghanistan's Helmand and Kandahar provinces, and a stepped-up series of raids by elite Special Operations forces have killed hundreds of senior militants throughout the country.

But Afghanistan is not Iraq, and a series of worrisome trends are clouding those successes. These trends raise real questions about how the war effort will end. The Afghan government is mired in corruption and is deeply unpopular, and relations between Afghan President Hamid Karzai and the Obama administration have never been frostier.

Violence is up sharply in eastern Afghanistan, as well as in the areas surrounding Kabul, in part because of the free flow of militants from neighboring Pakistan. U.S. and Afghan casualties are at record highs. The Taliban, meanwhile, has shown virtually no willingness to engage in substantive peace talks despite the Obama administration's stated readiness to do so.

The fates of Gates's budget initiatives are just as murky. The Defense chief has canceled scores of over-budget or under-performing programs, cuts that will save hundreds of billions of dollars over coming decades. In January, Gates said that the Pentagon would reduce its spending by $78 billion over the next five years. More recently, the Defense chief said he supported Obama's calls for additional, steeper cuts--$400 billion over the next 12 years--even as he made clear he was surprised by the president's decision and slightly alarmed about its possible repercussions.

But congressional Republicans have fought many of Gates's moves, working to salvage parts of some of his canceled programs and repeatedly defying the Defense chief by approving money for a second engine for the military's next-generation Joint Strike Fighter. On the other side of the spectrum, Democrats--supported by large numbers of tea party-backed Republicans--have called for even steeper cuts in defense spending to help narrow the nation's budget deficit. That raises the prospect that the Pentagon's budget could be slashed in coming years to levels that Gates has publicly warned would leave the military unable to perform certain missions and at risk of becoming a "hollow force."

A historian by training and temperament, Gates has privately acknowledged in recent weeks that he knows his reputation could change dramatically in coming years if Afghanistan--and the military escalation he designed and supported--comes to be seen as a failure. He knows, too, that Iraq's future remains unsettled. The surge that Gates oversaw brought Iraq out of a bloody civil war and turned around a conflict that seemed destined to end in an American defeat. But violence continues to rage there--three more U.S. troops died in southern Iraq on Thursday--and political tensions have sparked renewed fears of sectarian bloodshed.

Still, the wars in Afghanistan and Iraq--and the push to cut Pentagon spending--are now the concerns of Gates's handpicked successor, outgoing CIA chief Leon Panetta. In his remarks on Thursday, Gates joked that Panetta had penned an op-ed right after the 2008 elections suggesting Obama retain him at the Pentagon.

"So when President Obama asked me for my recommendation for a successor, I returned the favor," Gates said.

The Defense chief, who has publicly cried on numerous occasions while speaking of fallen American troops, said he would bear the burdens of having sent so many troops into harm's way for years to come.

"I'll just say here that I will think of these young warriors--the ones who fought, the ones who keep on fighting, the ones who never made it back --till the end of my days," he said.

During the Bush administration, Gates carried a digital clock ticking down the seconds left until he could retire to his lakeside house in Washington state. He threw the clock away when Obama asked him to stay on, a move that Gates had previously described as "inconceivable." Near the end of his remarks on Thursday, Gates turned to his wife, Becky, and told her the ceremony would mark his final retirement from public service.

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